Director of California's parks system resigns amid revelation of surplus at a time when many parks had recently been threatened with closure because of budget woes.

Ruth Coleman resigned as director of California state parks after the department's… (Rich Pedroncelli / Associated…)

SACRAMENTO — California's parks system stashed away nearly $54 million even as it was cutting services and threatening to close parks, a revelation that prompted the resignation of the department's director Friday.

The hoarded cash remained untapped while the California Department of Parks and Recreation painted a dire picture of the system's health, soliciting hundreds of thousands of dollars in donations in what was thought to be a desperate scramble to keep facilities open.

At the request of Gov. Jerry Brown, the state attorney general's office has launched an investigation into the hidden surplus, which officials believe the department concealed from state bookkeepers, the governor and the Legislature for at least a dozen years, dating to the tenure of Gray Davis. The governor also ordered a comprehensive audit of the parks system's accounting practices and management.

"This is undeniably disappointing news," said Secretary John Laird of the California Natural Resources Agency, which oversees the department.

It was unclear whether mismanagement or deliberate deceit led to the concealment of the funds.

State auditors found the extra money in two funds, one intended to finance the purchase and upkeep of properties for off-road vehicle recreation, the other for general park maintenance and restoration. The money came from user fees, rentals and fines.

Laird said state officials have not determined why the money was underreported, nor which official would have been responsible for the accounting discrepancy.

The director who resigned, Ruth Coleman, had been in the job since 2002, making her the longest-serving head of the parks system. In her letter of resignation to the governor Friday, Coleman said she had been unaware of the extra money and was "personally appalled to learn that our documents were not accurate."

Her second in command, acting Chief Deputy Michael Harris, was removed from his post.

Janelle Beland, the No. 2 official at the California Natural Resources Agency, will replace Coleman as interim director. She has been directed to report to the governor and Laird on further measures the state should take "to ensure that the department is being managed with honesty, accountability and transparency," said a statement from the resources agency.

"It's devastating," said Caryl Hart, chairwoman of the state Parks Commission. "I feel like a victim."

Hart, also director of the Sonoma County Regional Parks Department, said officials there are shelving plans for a ballot measure to increase the county sales tax to help pay for parks.

"I don't see how at this moment in time, with this kind of black cloud hanging over the parks, we can ask taxpayers to support a tax measure," Hart said.

News of the surplus rocked the Capitol on Friday and prompted the governor's budget office to launch a review of all dedicated funds across state government, to assess whether poor accounting is more widespread.

A lack of oversight contributed to the problem. Administration officials said the parks department was sending inaccurate information to the governor's budget office and accurate information to the state controller, who monitors cash flow. Those two sets of data were never reconciled.

"That's changing," said Michael Cohen, a deputy in Brown's Department of Finance. "We will be altering our protocols."

State Sen. Noreen Evans (D-Santa Rosa) and other parks advocates reacted angrily, and leaders of both houses vowed to hold oversight hearings when the Legislature reconvenes next month.

"If one department can hoard $54 million for 12 years, who else is playing the same tricks of deceit and thievery?" Evans said in a statement.

The state planned to close 70 parks this month to save $22 million, less than half the amount of the department's hidden surplus. Almost all of the parks were kept open because of partnerships with other agencies, private donors and nonprofit groups. Laird said in a conference call with reporters that lawmakers will ultimately decide how to appropriate the surplus.

"It disgusts me," said Myra Hilliard, who donated and helped raise money for the Pio Pico State Historic Park in Whittier. "Is anybody honest about anything anymore? Here we are working so hard to keep the park open and they have all this money they aren't telling us about."

Hilliard said elementary school students held a bake sale to raise $120 after being told the park might close. The park costs $80,000 a year to keep open.

Laird expressed regret about such donors. "I'm deeply disappointed and feel truly sorry for everyone who was involved without this being known," he said. But he could not say whether any of them will be repaid. "We're going to cross that bridge when we get to it," he said.

Laird said the accounting problem, first reported by the Sacramento Bee, was found by a newly installed deputy director at the parks department, who was brought in earlier this year to examine finances.